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Budget Approved Without Fare Increase

The Chicago Transit Board today approved a $1.27 billion budget for 2010. The budget proposes management efficiencies, elimination of more than 1,100 jobs and service reductions. However, due to an agreement brokered by Governor Quinn’s office, a proposed fare increase was removed from the budget. To replace the $83 million in revenue that was anticipated from the fare increase, the Regional Transportation Authority will issue bonds in 2010 and 2011 that will enable the CTA to use eligible capital funds to support operations and replace those funds with the new RTA revenue. As a result, the CTA has agreed to maintain current fares for the next two years.

“Maintaining fares will be a great help to our riders who are being severely impacted by the recession every day. Those who depend on the CTA to go to and from work and look for work are now protected from having to pay more to ride,” said Chicago Transit Board Chairman Terry Peterson. “At the public hearings, riders told us how they are struggling in this economy and cannot afford the financial burden of higher fares. This agreement allows us to provide them some relief by stabilizing fares for the next two years.”

“Throughout the budget process, our goal has been to manage responsibly and make strategic budget decisions so that we can weather this recession and still provide the critical, affordable services that so many working men and women rely on,” said Chicago Transit Authority President Richard L. Rodriguez. “Although we are pleased to be able to hold fares steady, service efficiencies remain necessary to balance the budget. We will continue to talk with the State and meet with the unions to discuss alternatives. If there are options that can help us reduce the impact on riders, we will continue pursuing them.”

In 2010, non-union employees will be required to take up to 18 unpaid days and forego wage increases. CTA leadership has asked the unions to consider similar actions in order to reduce costs. Current labor contracts provided a 3% wage increase this year and call for 3.5% wage increases in 2010 and 2011.

To minimize the impact of a slow economy on riders, the CTA has already cut $50 million in spending this year through management improvements and efficiencies. They included strict controls on labor costs, savings in materials and fuel, more efficient management of contracts, eliminating non-essential travel and seminars, and a reduction in the cost of equipment maintenance services due to the retirement of problematic buses and the introduction of new buses.

Cost saving measures will continue in 2010. In addition to the furlough days and deferral of wage increases, 100 non-union positions will be eliminated in 2010. By asking vendors to reduce contracts, the CTA has received commitments that will save nearly $2 million in the next year. The CTA actively manages its fuel costs through the use of hedging mechanisms. The decrease in the per gallon costs, combined with hedging and lower usage will allow CTA to reduce its fuel costs by $35.3 million from 2009. Fuel hedging alone will save CTA $6.7 million in 2010.

In total, the 2010 Operating Budget is nearly $1 million lower than the projected 2009 Operating Budget.

Although service reductions remain part of the 2010 budget, they were designed to retain as much service as possible while reducing costs and maximizing efficiency. The only route eliminations are nine express routes that have corresponding local service. All parts of the region that have CTA service will continue to have it. Savings will be realized through less frequent service and service that might start later in the morning or end earlier at night.

Key elements of the plan include:

All rail routes and all bus routes will be maintained except for nine express routes that have a matching local route.

Night Owl service on both bus and rail remain unchanged, preserving service for those third-shift workers who have few options other than public transit.

To the extent possible, the impact to rush hour service was minimized.

Service will run less frequently on 110 routes.

Service spans will be adjusted for 41 bus routes. These routes will either start service later, end service earlier, or both.

In total, bus service will be reduced by 18% and rail service by 9%.

These service changes will provide additional management and maintenance efficiencies by allowing CTA to retire 287 buses that are 15-years-old and costly to maintain and to close Archer Garage, which is a 102-year-old facility that was not designed to support 2010 requirements.

The service changes are scheduled to go into effect on February 7, 2010.

Until then the CTA will also continue to explore alternatives with the State and seek the unions’ cooperation to reduce costs.

“The CTA is committed to its customers,” said Rodriguez. “We will continue to look for the most efficient operating methods and call upon the resourcefulness of staff to help reduce costs and increase revenue. I am confident that we will get through these tough times and emerge a better, healthier, more efficient agency.”